For most people, paying off a mortgage is not really a priority. Given the typical timeline of 20-30 years, it’s really hard to get excited at how big a dent an extra couple thousand dollars will make.
Combined with the fact that most of us will sell that home long before we own it outright, it just always seems like any extra money you have could be better used somewhere else.
Obviously if you’re struggling with your current finances, the idea of ‘finding’ thousands of extra dollars might be a bit laughable. If, however, your family is making anywhere over, say, $60,000 a year (obviously depending on where you live and how much your home cost), you really do have some exciting options available.
What would life be like without a mortgage? Would you be able to travel more? Work less? Have one parent stay home with the kids? Rent it out and live abroad somewhere?
What if you make paying your mortgage off a real priority in your life? What if you bought cheaper cars or took staycations instead of flying around the world? What if you took a second job, negotiated a raise at your current one, or started a home-business to work on on the side instead of wasting time in front of the TV? What if you threw every bonus and tax refund towards your mortgage?
What if, by this time next year, you’d done some or all of these things, and now, between money you were no longer spending and extra money you were earning, your family had an extra $20,000 to $40,000 a year to put towards your mortgage?
How long would it take to pay down your home compared to what it is now?
Using Low Interest Rates To Speed Things Up
If you are locked in to a high interest rate on your mortgage, you should really think about refinancing. A quick search of ‘mortgage rates Canada’ will give you a good idea of just how low rates can be. If you DO decide to get aggressive with your payments, the more you can pay down at the beginning, the more you’ll save in interest in the long run. Refinancing to that lower rate can greatly speed up the effectiveness of lump-sum payments as you get crazy with your mortgage.
Not For Everyone
Being this kind of aggressive with your mortgage isn’t easy. It requires a very long-term outlook, and you’ll struggle constantly saying ‘no’ to things like trips, entertainment, and all the other fun stuff your friends are doing.
The up-side, however, is knowing that every dollar that goes towards your home is securing a brighter, more flexible future for you and your family.
Get excited about the prospect by checking out some online calculators and figure out how much faster you can actually achieve this. Sites like MortgageRates.ca offer a lot of tools to get started right away.